The Monetary Authority of Singapore (MAS) recorded an overall loss of $10.6 billion for the year ended March 2013, after taking into account the translation effects from an stronger Singapore dollar.
"We made good investment returns but when measured in Singapore dollars, these gains were more than offset by the strength of the currency," said MAS managing director Ravi Menon at the release of the central bank's annual report on Tuesday.
The central bank made investment gains of $8.9 billion for the year, down from $12 billion the year before, due mainly to lower interest income as interest rates declined.
Meanwhile, Mr Menon said the Singapore economy will "comfortably meet" the central bank's forecast of a 1 to 3 per cent expansion this year on the back of a gradual recovery in the external environment.
He also said inflation will likely be lower this year than last year, and added that the MAS has revised downwards its headline inflation forecast to 2 to 3 per cent, from 3 to 4 per cent previously.
Domestic-oriented sectors are expected to be the mainstay of economic growth, underpinned by ongoing expansions in the transportation infrastructure and other major building works, the central bank said in its annual report.
"Nonetheless, the recovery momentum is expected to be gradual and uneven, capped by the challenges in the advanced economies as well as resource constraints associated with domestic restructuring," it added.
These resource constraints will be increasingly significant as the population ages and the foreign worker inflows ease.
Over the medium term, growth is expected to "reset to a more modest range compared to the 2000s", the MAS said.
As the economy shifts towards productivity-driven growth, the labour constraints will lead to further increases in domestic business costs, the central bank added.
On the other hand, imported inflation will likely be subdued, as commodity supply is robust, the MAS noted.